Tyrant Co's bonds currently sell for $1,180 and have a par value of $1,000. They pay a $105.00 annual coupon and have a 20 year maturity, but they can be called in 5 years at $1,120. What is their yield to call? (Ch. 7) Group of answer choices 8.59%
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Tyrant Co's bonds currently sell for $1,180 and have a par value of $1,000. They pay a $105.00 annual coupon and have a 20 year maturity, but they can be called in 5 years at $1,120. What is their yield to call? (Ch. 7)
Current price of bond =1180
Call value =1120
Period =5 years
Coupon =105
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